SELLOUT TO SCIENTOLOGY

ST. PETERSBURG TIMES
January 6, 1998

For 25 years, the Internal Revenue Service held all of the
cards against the Church of Scientology. The IRS steadfastly
refused to give Scientology a much-coveted tax exemption, and the
courts consistently sided with the agency. Then the IRS abruptly
folded in 1993, granting the tax exemption while refusing to
disclose the details of the agreement. Amid such secrecy,
taxpayers could only wonder what Scientology offered to persuade
the IRS to abandon more than two decades of policy.

The answer turns out to be a relative pittance.

The secret agreement, obtained by the Wall Street Journal,
indicates Scientology bought its way out of potentially hundreds
of millions of dollars in taxes for $12.5-million. In return, the
IRS granted tax-exempt status to 114 Scientology-related
organizations, dismissed tax penalties and liens against some
church groups and stopped audits of 13 Scientology entities. That
is not a deal; it is a sellout by an IRS that has been accused of
running roughshod over less threatening taxpayers.

The tax-exempt status gave Scientology something even more
important than avoiding millions of dollars in tax bills. It gave
members a powerful weapon to use in their ceaseless public
relations campaign to be considered a legitimate religion. When
Germany fights Scientology and labels it a business, the church
waves its IRS ruling. The impact also was felt in Pinellas
County, where the ruling forced the property appraiser to treat
Scientology "like any other religion" and give up a
long court battle over whether Scientology's local properties
should be exempt from property taxes. Now about $20-million of
Scientology's $30-million worth of property in the Clearwater
area is exempt from taxes. Taxpayers have the IRS to thank.

With details of the Scientology agreement now public, there is
every reason to question whether IRS officials were more
interested in avoiding harassment than in sound tax policy. The
agreement called for Scientology to drop its lawsuits against the
IRS and agency officials and to stop helping church members who
had filed similar lawsuits. That could have affected some 2,200
lawsuits. The New York Times also has reported about
Scientology's hiring of private investigators to look for code
violations at a building owned by IRS officials, and about an IRS
whistle-blowers group financed by the church. Scientology was not
the typical taxpayer quarreling over its tax bill, and it did not
receive typical treatment.

When Scientology's tactics were disclosed last year, no one
heard a peep from Congress. Since then, members of Congress from
both political parties have treated the IRS as a punching bag.
Perhaps news of the $12.5-million settlement finally will prod
someone in Washington to ask the agency some tough questions
about this one-sided agreement. To most taxpayers, $12.5-million
would be a stiff penalty. For the Church of Scientology, it was
the small cost of doing business.